The expenses system for MPs is so inefficient that it costs more to process some claims that the value of the claim itself, the public accounts committee (PAC) has warned.
In a report published on Friday, the committee said 38 per cent of expense claims processed by the Independent Parliamentary Standards Authority's (Ipsa) cost more to administer than the payment requested by the MP.
Last year £2.4 million was spent in staff time claiming expenses according to a National Audit Office report.
The study also found 85 per cent of MPs believed the time it took to deal with expenses was now so great that it prevented them from doing their job as well as they could.
Liberal Democrat MP Bob Russell said such inefficiency would not be tolerated in a private company.
"They cannot be put in the value for money arena: no private business would allow its back office to be so inefficient. It takes hours for claims to be entered and its actually costing the public purse," he said.
In 2010-11, Ipsa paid out over £118 million in total, comprising £98.6 million in salaries for MPs and their staff, and £19.5 million in expenses.
But the NAO found that 91 per cent of MPs were subsidising costs out of their own pocket. Russell said he pays out over £3,000 a year from his own salary to cover his expenses as a result of the new regime.
"A system which only favours personally rich MPs is not helpful," he said.
Ipsa took over responsibility for administering MPs expenses in May 2010, in the wake of the 2009 parliamentary expenses scandal.
Relationships between MPs and Ipsa have been strained since its inception, with many politicians unhappy at what they see as an overly bureaucratic and slow system.
In one instance, Conservative MP Penny Mordaunt claimed she was left with only £22 for Christmas after Ipsa took so long to make payments.
While Ipsa has in the past accused some politicians of bullying their staff.
But despite the ill-feeling Westminster, the committee said it believed the relationship between the independent watchdog and MPs had improved in recent months.
“We were impressed by the constructive approach taken by all sides at our hearing. This bodes well for improved relations between Ipsa and MPs in future.
It added: "Ipsa made a number of commitments to improve the system and we look forward to seeing the results.”
Sir Ian Kennedy, the chairman of Ipsa, has said his primary focus is restoring public trust in the parliamentary expenses system, not the "customer care" of politicians.